How To Buy Owner Financed Land Using a Title Company

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Hey there are you looking to invest in land and you’re wondering how owner financing land works my name is felicia i’m a land investor and partner at compass land usa if you give me just a few minutes of your time here i’ll help you to understand the owner financing process so you can be protected and ready to use it for your next land purchase that closes with

A title company so to start off why does owner financing land even exist right can’t i just go to the bank and get a loan like i would for my house or go to a hard money lender and get a loan like i would for my car it can be really difficult for you to get a loan for a land purchase for two main reasons the first one is that the land itself is the only on-site

Collateral for that loan and the second one is in the eyes of the banks land is not easily converted to a built home it means that banks and traditional lending institutions don’t like that land itself is the only collateral they prefer to have a structure like a house building something tangible on the land and often the purpose of a land purchase is to enjoy it

Recreationally right not to make it as your immediate primary residence and that’s the key here because unless you’re building on it and making it your primary residence right away it’s very unlikely that you would get a traditional loan especially if you wanted to buy land to hunt on use as an investment camp or just use recreationally because of these two points

Investors like myself will owner finance properties for you this means that we will carry the loan for you so you don’t need to involve a bank or other lenders and that’s why this process is sometimes referred to as owner will carry or seller will hold because we hold and finance and manage it for you so instead of making payments to the bank you make payments to

The property owner and sometimes for larger value properties like 20 30 50k and up the loan will be managed through a title company instead all right and that brings us to the part you have been patiently waiting for how to buy owner finance land with a title company how does this process work if a title company is involved well if you choose to close your owner

Finance land purchase through a title company which again is a great idea for higher value properties these are the steps you need to follow all right step one so first you need to select a title company yes this is obvious but often the seller will leave the title company selection up to you as the buyer so you need to make sure you do your homework on that

Step two next now you’re going to need to notify the title company of the verbally agreed upon financing terms that you came to with the seller they need to know this because they’re going to be the ones that are creating the paperwork and managing this transaction for you so they need to know what the nuts and bolts are of it step three next the title company

Will prepare a promissory note deed of trust and deed some title companies will send this packet to you via regular mail some will do it via email so a promissory note this document states the terms of the sale so how much you’re going to pay a month for how many months it will also detail out the interest rate if there is one the starting principal balance all

That stuff so that is your part of the promise as the buyer the document will also spell out the seller’s promise to you so if you promise to pay off the property in full per the terms the seller in return promises to deed you the property so at the end of the payment period once the property is paid for in full the seller will issue you a deed for the property

Okay a deed of trust this document is essentially an agreement between a lender and a borrower to allow a third party to manage that whole transaction so remember in this case the third party is the title company and we’re essentially saying we would allow the title company to serve as a trustee the trustee will hold the ownership of the property until it’s paid

For in full so the ownership is actually transferred at this stage so stage two from the seller to the buyer but the title company doesn’t release or record the transfer until the property is fully paid for indeed this one’s kind of obvious it’s legally transferring ownership from the previous owner which would be the seller to the new owner the buyer and that’s

You on to step four once the document package is signed by both the buyer and the seller everyone should receive a signed copy if you’re using an email signing service this should be done automatically at this time you as the buyer you’re going to need to submit a down payment and the title company fees the down payment goes towards your total purchase price and

The title company fees well you’re paying them to manage the transaction right so that means the paperwork the filing managing the loan itself so there are some fees associated with that okay number five now we’re at the easy stuff to set it and forget it so once everything has been signed the title company should help set you up with automatic monthly payments

They’re going to be the ones that are managing the loan in this case not the property owner so they again they’re managing that loan on behalf of the seller so each month they are going to collect the monthly payment from you and distribute it over to the seller okay i know this must feel like a ton of information so let’s go over those steps again real quick

Number one select a title company number two notify the title company of the verbally agreed upon financing terms you came to with the seller number three the title company will prepare a promissory note a deed of trust and a deed and send them over to signing by the buyer and the seller four everyone is sent a signed copy of the documents the down payment and

Title company fees are also processed at this time and last step five the title company will collect all future monthly payments from the buyer and distribute them to the seller okay so there are three key differences when owner financing a land purchase through a title company the first one is you get title insurance but this means that the closing costs are

Higher second the title company acts as an independent third party throughout and third the deed transferring ownership is signed right in the middle of the process as opposed to at the end after the property has been paid for in full if you’re wondering how this process works if you were to owner finance land directly from the owner that is the land seller make

Sure you grab the guide because i have those steps listed for you along with these steps here for a title company and some other tips and advice that’ll really help you get a great understanding of how the owner financing process for land works but where do i find these owner finance land for sale where do i look a lot of people will spend their time searching

Sites like the mls zillow trulia and these sites are great but they don’t specialize in owner financing because realtors just don’t do that right a realtor is not normally the property owner they’re normally just selling or advertising the property marketing it on behalf of the owner so if they don’t own the property they’re not going to front the

Purchase price for you some great places for you to look for owner finance lane for sale by the owner would be a website like mine we have a ton of listings and we’re getting new properties on a weekly basis and we actually have three owner financing plans for each property so there’s a lot of flexibility and options for you there we also

Do not do credit checks and we don’t charge a prepayment penalty another couple of great sites would be and the network they have a couple of sites under their umbrella so there’s lots for you to choose from there all right so as you can see owner financing a land purchase is a great tool for you to use it’s faster and easier than

Traditional financing it has much lower closing costs than a bank normally would and often times you get immediate access to your new property i hope you found this video helpful if you made it this far thank you for watching and for taking the time to educate yourself on how to buy owner-financed land

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How To Buy Owner Financed Land Using a Title Company By Compass Land USA